Project

Los Reyes Project

Sinaloa, Mexico

Overview

Located 43 kilometres south east of the mining centre of Cosala, Sinaloa, Los Reyes has an extensive mining history that stretches back into the 1700s. Recent development work has focused on conventional milling and carbon in leach extraction of gold and silver. The Company envisions a simple heap leach operation that potentially has significantly lower capital costs and shortened time line to production. Los Reyes has significant resource upside with open extensions to known resources as well as eight additional discrete exploration targets.

“Los Reyes is an exceptional opportunity for exploration and potential development poised to fast-track through a preliminary economic assessment (PEA) with a construction decision based on low capital expenditure and reduced technical risks. The Company will work to complete the feasability study while continuing to drill in order to expand existing data as well as identify promising new targets.”                         —Company CEO, Andrew Bowering

History

Gold and silver were discovered at Los Reyes by the Spanish in the late 1700s and mining occurred in the area for over 150 years up until the 1950s. The Guadalupe de los Reyes underground mine opened in the late 1800s and to date is the most significant source of gold production in the district. It is estimated to have produced 500-600,000 oz of gold and 40M oz of silver at reported grades of +10 g/t Au and +500 g/t Ag.

From the 1950s through the 1980s there was limited activity in the Los Reyes area other than mostly exploration reconnaissance studies. Modern drilling began at the Los Reyes area in the 1990s and was targeted at defining shallow and lower-grade gold-silver mineralization in areas surrounding the Los Reyes underground operations. Since that time, over 40,000 meters of RC and core drilling have been completed within the current project boundaries resulting in extensive area-wide resource data.

Why Los Reyes?

Los Reyes hosts well-advanced:
Gold resources of:
380,100 oz
indicated
155,200 oz
inferred
Silver resources of:
6,315,300 oz
indicated
3,639,000 oz
inferred
8
Established and operating in Sinaloa, Mexico with an additional 8 early stage gold/silver opportunities
Amenable to simple open pit mining and plans are to engineer, permit and construct a heap leach mine in 2 years
Planned capital structure values company at $21 per ounce gold (peer average $52-$56)
Management and insiders ownership 20%, Minera Alamos 19.75% and new shareholders ~40%
Holds significant upside potential for both resource expansion, along strike, down dip, at depth, and in new areas
Experienced management team assembled to steer resource expansion, boost permitting and increase mine development

Our Value Proposition

Near term low cost production on current resources
380,000 OZ GOLD
indicated
155,000 OZ
inferred
And significant silver credits, amenable to heap leach.
500,000 tonnes
At 3.2 g.t Au
High grade target for starter pit 500,000 tonnes At 3.2 g.t Au with no initial pre-strip required for potential 6 month pay back of start-up capital.
0.5 g/t
Currently modelled at 0.5 g/t cutoff potential to rework models at 0.3 g/t adding ounces
76% Au and 24% Ag
Proven heap leach recoveries of 73% Au and 30% Ag with upside from optimization.
1.73 g/t
1.73 g/t gold average on indicated resource grade

Exceptional exploration upside with current and new targets

  • Current resources open on strike and to varying depths.
  • 8 to 10 new high grade underexplored surface discoveries for drill testing.
  • Untested new claim blocks added to project yet to have any exploration

Consolidation opportunity and partnership

  • Partnership with Minera Alamos paves the way to capitalize on their early mover success
  • Potential consolidation of assets and operations into mid-tier producer at a later date

Property Details

Location

  • Ownership of 6,300 hectares in mining friendly Sinaloa State;
  • Close proximity to infrastructure including: water, power, roads and population.

Recent History

  • Current owner united all adjacent claims blocks and surrounding lands over last 10 years.

Growth

  • 8 additional new high grade surface targets
  • Existing deposits open to expansion
  • Depth never explored

Mine Planning Stage

  • Current resource is ready to take to PEA with detailed engineering on simple ½” crush leach operation
Epithermal Veins in a District Scale Project
Mining Friendly District

Claim Consolidation Added

  • 8 additional new high grade surface targets
  • Untested new zones including Las Primas, San Miguel, Chiripa, and Mariposa
  • Untested surface showings.

Mineral Resource

Indicated & Inferred Resources at a Cut-off Grade of 0.50  g/t Au
Indicated Tonnes Kt Au oz Au g/T Ag oz Ag g/T
El Zapote 3,980 206,000 1.61 2,114,135 16.52
Noche Buena 937 39,700 1.32 497,400 16.52
San Miguel – Chiripa 459 47,100 3.19 1,141,800 77.37
Guadalupe 1,520 86,300 1.76 2,601,800 52.51
Total Indicated 6,843 380,100 1.73 6,315,300 28.71
Indicated Tonnes Kt Au oz Au g/T Ag oz Ag g/T
El Zapote 3,980 206,000 1.61 2,114,135 16.52
Noche Buena 937 39,700 1.32 497,400 16.52
San Miguel – Chiripa 459 47,100 3.19 1,141,800 77.37
Guadalupe 1,520 86,300 1.76 2,601,800 52.51
Total Indicated 3,200 155,200 1.49 3,639,000 34.87
  1. The resource model for Los Reyes was prepared by Tetra Tech, Inc. of Golden, Colorado for Minera Alamos dated April 16, 2018. Updated report being filed in conjunction with the transaction.
  2. No Measured Resources of Mineral Reserves of any category were identified. The mineral resource estimate has an effective date of
    February 8, 2013 and is presented in a geological report which is being amended and restated in conjunction with the transaction.
  3. To the knowledge, information and belief of Minera Alamos, there is no new material scientific or technical information that would make the disclosure of the mineral resources in the Report inaccurate or misleading.
  4. To the knowledge, information and belief of Minera Alamos, there is no new material scientific or technical information that would make the disclosure of the mineral resources in the Report inaccurate or misleading.
  5. Mineral Resources were calculated based on a cut-off grade of 0.5 g/t Au.

4 Delineated Deposits

  • Guadalupe, East/West
  • El Zapote
  • San Miguel / Chirpa
  • Noche Buena

Sample Historic Drill Results

  • ZA58 - 28m at 4.09 g/t Au, 24 g/t Ag
  • ZA85 - 57.9m at 2.49 g/t Au, 16 g/t Ag
  • GS62 - 33.5m at 3.9 g/t Au, 173 g/t Ag
  • SM3 - 12.19m at 5.74 g/t Au, 53 g/t Ag

1. 43-101 Mineral Resource Estimate: April 16, 2018.

2. Details of the mineral resource estimate are provided in the Minera Alamos’ press release dated June 18, 2018.

3. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The Company does not treat historical estimates as current and has not completed sufficient work to classify historical estimates as current mineral resources. The Company does believe the previous work is reliable and the information, which was made publicly available at the time, may be of assistance to readers. As part of its due diligence process, and as required by the policies of the Exchange, the Company has commissioned Tetra Tech, Inc. to prepare a revised Los Reyes geological report which is expected to contain a new resource estimate. Once completed, a copy of the report will be available for review via the Company’s profile on SEDAR (www.sedar.com).

Exploration Potential

Features

  • Over 16.5 kilometres of mineralized strike length;
  • 15.1, 14.8 and 9.5 g/t gold at surface;
  • 9 kilometres of untested strike;
  • Numerous surface showings untested;
  • Multiple high grade surface grabs with no follow up;

Significant Undervaluation to Peers

$21
Prime Mining
$52 Resource
$56 Engineered
Haywood/Bloomberg Global Average EV/oz Au

1. Enterprise Value (“EV”)/Gold Resource Ounce is a non-IFRS performance measures. Enterprise value is calculated as of April 11, 2019. Data sourced from Haywood Securities and Bloomberg.

Timeline & Performance Milestones

1-3 months
  • Complete transaction, initiate drill permitting, establish logistics and ground operations
  • Begin remodeling current data set, start Preliminary Economic Assessment (PEA)
6-12 months
  • Agreements and permits for a construction decision
  • Geotechnical and condemnation drilling
30 months
  • Anticipated Dividends
3-6 months
  • Begin surface exploration/additional drilling, metallurgical testing, environmental review
  • Finalization of resource models, engineering and metallurgical work to deliver PEA study
12-24 months
  • Award contracts and start construction of gold recovery plant and Heap Leach infrastructure
  • Award contract for contract mining, mobilize fleet and start pit development